Agricultural conservation practices can have a vast number of environmental benefits but adoption of these practices may not be widespread. If farm operators are able to reap financial returns for environmental services, adoption of these conservation practices could increase. One source of potential financial returns is in greenhouse gas (GHG) emission reductions or increased GHG sequestration. An example of a conservation management strategy for beef and dairy operations which has the potential to decrease GHG emissions or increase GHG sequestration is an intensively managed rotational grazing system. The objective of this study is to estimate potential financial returns from conversion to rotational grazing and the sale of GHG credits by Virginia beef and dairy farms. The three GHGs examined in the study are carbon dioxide, nitrous oxide, and methane. Primary and secondary data are used to simulate financial performance and GHG emissions for three case study farms under different levels of production and pasture utilization. Each case study farm is simulated under three reference conditions to calculate financial performance and three baseline scenarios and a regional performance standard to calculate GHG emissions on both a per farm and a per metric ton of product sold metric. The change in emissions between the scenarios is found and potential returns from the sale of GHG emissions credits are calculated. Results of the analysis demonstrate that conversion to rotational grazing has the potential to increase overall revenues for the farm operation from $4,197.72 to $50,007.46. GHG emission changes for the farm operation do not show a clear trend towards reduction. The amount of financial return from the sale of GHG reduction credits varies from $37.15 to $76.26 for the three case study farms for the initial calculations, and varies from $24.10 to $755.36 once the study performs sensitivity analysis for methane emissions. Therefore, results indicate that rotational grazing can increase net revenues for farm operations but additional net revenue from the sale of GHG reduction credits is small and dependent on the chosen baseline scenario and metric. Follow up research should address the following areas: changes in the cost of on-farm labor, risk of conversion to rotational grazing, increased accuracy of the measurement of GHG emissions and soil carbon, the effects of rotational grazing on forage TDN, and the water quality impacts of rotational grazing. / Master of Science

Virginia dairy producers are considering intensive grazing as a profitable and ecologically viable alternative to confinement dairy production. The objective of this study is to compare financial performance for pasture-based dairy farms relative to similar resourced-based confinement farms. Comparisons are based on the recommended financial and profitability measures of performance provided by the Farm Financial Standards Council. Primary and secondary data plus simulation of daily pasture supply and animal demands are used to develop 100 and 200-cow farms with a land base representative of the Ridge and Valley regions of Virginia. Representative farms were developed to explore financial performance based on the intensity of pasture use, from total confinement to seasonal farms using intensive grazing (in which pasture, hay, and energy supplements are the only sources of nutrients for all dairy animals on the farm). Results of the analysis demonstrate that pasture-based seasonal production is more profitable and has a higher level of repayment capacity and financial efficiency than all other production systems in this study. Greater financial performance by the seasonal farms is obtained even though such farms obtain lower average annual milk prices and 10 percent less milk sold per cow than the similar confinement farms. Pasture-based farms that feed a partial total mixed ration during the summer (25 percent of ration dry matter and 45 percent of ration dry matter from pasture) have fewer financial advantages than the seasonal farms. However, their performance exceeds that of the confinement farms and intensive pasture-based farms milking year round. The intensive pasture-based farms milking year round are the poorest financial performers. Additional conclusions for this study are: 1) the 100-cow farms exhibit insufficient financial performance to provide for family living, debt service (at 40 percent debt to equity ratio), and a cushion for events such as droughts or declines in milk prices; and 2) financial performance of the 200-cow dairies is better, yet the added income from a member of the farm having off-farm income will provide a cushion against unforeseen production and financial risks. Follow up research should address the interface of three issues; stocking rates, farm profitability, and environmental compliance. / Ph. D.